The unsecured bank borrowing limit of 12 months’ income for consumers, which was slated to take effect in June, could kick in later.
The Monetary Authority of Singapore (MAS) is reviewing the implementation timeline and details will be released early next month, said Minister for Culture, Community and Youth Lawrence Wong. He was responding to MP Foo Mee Har’s question on individuals who would be affected by the new rule.
The MAS estimates that 4 to 5 per cent of borrowers may be above the 12-month borrowing limit. It will get a more accurate estimate of the number of affected borrowers from the Credit Bureau Singapore by the end of this month, said Mr Wong, who is also an MAS board member.
The authority has been working closely with key lending banks and Credit Counselling Singapore to “facilitate the transition” for affected individuals, he said.
He added that next month, the Association of Banks in Singapore will announce details of a debt repayment scheme for these borrowers that it has worked on with leading retail banks and Credit Counselling Singapore.
MAS has also granted banks the flexibility to not suspend credit for borrowers who already exceed the borrowing limit. The borrowers have up to June 2019 to make the transition. The borrowing limit does not apply to loans for medical, educational or business purposes, he added.
While the vast majority of borrowers will not be affected by the borrowing limit, Mr Wong said others will need help and more time to adjust. On financial education efforts, he said programmes for social workers and counselors will be stepped up.
Credits: Channel NewsAsia